Your credit report includes a list of itemized debts, payments, and bills. Collectively, these items give the credit bureaus information to assign you a credit score: a metric of creditworthiness that impacts how easy it is to get loans, credit cards with good interest rates, and more.
But what happens if your credit report has multiple or duplicate collection accounts? You need to know what to do and how to solve the issue ASAP.
Put simply, a collection account is any debt account that has either been charged off or closed by the original lender/creditor. The debt account is then sold or transferred to a debt collection agency, sometimes called a debt buyer.
For example, say that you default on a car loan for several months. Rather than continuing to contact you about what you owe, the car loan lender sells the debt to a debt collection agency, which then takes up the responsibility of calling you or sending you letters to acquire the debt’s remaining balance plus interest.
A duplicate collection account is exactly what it sounds like: the same collection account listed twice or more on your credit report.
Continuing with the above example, if your car loan lender sells your debt account to a debt collection agency, the debt collection agency can then tell the credit bureaus that it has a new debt to report. When this happens, your debt collection account might appear twice on your credit report by accident.
In most cases, duplicate collection accounts appear purely by accident. As noted in the above hypothetical scenario, an initial lender might report a collection account, but a debt collection agency might report the same account to the same credit bureau, causing it to appear twice.
In other cases, the credit bureaus themselves might make a filing or recording mistake. For instance, say that you have your debt transferred from a credit card lender to a debt buyer. The credit bureau knows that the debt was transferred from one party to the other, but fails to eliminate or remove the original collection account because of a computer error or human error.
Regardless, duplicate collection accounts are never good for the health of your credit score.
Yes, and always for the worse.
Any collection account is bad for your credit score. After all, it means that you have at least one outstanding debt and that the debt was left for long enough that the original lender sold it to a collection agency. This doesn't bode well for your creditworthiness in the eyes of credit bureaus and lenders.
However, multiple or duplicate collection accounts can pile on and severely affect your credit score. With each collection account under your name, your credit score gets worse and worse. If you have duplicate collection accounts dragging your credit score down, it’s being negatively affected for no reason.
To fix your credit score and make sure it isn’t negatively affected beyond what is legal, you need to know how to remove duplicate collection accounts from your credit report.
The only way to know if you have duplicate collection accounts affecting your credit is to take a long, hard look at your credit score.
Each credit bureau produces a separate credit report – some agencies and organizations allow you to ask for a comprehensive breakdown of all three reports. In any case, the FCRA gives all consumers the right to a free credit report at least once per year.
You should download your credit report from each credit bureau and look through the line items one by one. Carefully examine both the names of collection accounts and the amounts due – if all the information for two line items, for instance, is exactly the same, odds are good that it’s the same collection account reported twice.
You may only notice that your credit score is being affected by duplicate collection accounts if you think your credit score is lower than it should be. But you should keep an eye on your credit report from time to time in general to prevent issues like this from accruing or impacting your score anyway.
Removing a duplicate collection account from your credit report follows the same process as disputing any other inaccurate credit information: filing a credit dispute with the bureaus in question.
Each of the credit bureaus, including TransUnion, Equifax, and Experian, offer online portals through which you can file a credit dispute request, plus include information related to the request, like the bad or duplicate collection accounts and their balances. You can also contact the credit bureaus by phone or write a letter to them personally.
However, you should also contact the credit furnishers – that is, the original lenders of the debt/the debt collection agencies – that are related to the duplicate collection account by mail or email. Explain the situation and ask them to tell the credit bureaus that they made a mistake. If they do so, the credit bureau will be more likely to quickly correct the problem. In most situations, credit disputes lead to fixes within 4 to 6 weeks.
If your credit dispute doesn’t result in a positive change, you could have grounds for legal action. You are entitled to an accurate credit report, so credit furnishers are not legally allowed to refuse to assist or to correct any errors they may have made. The same is true for the credit bureaus themselves.
If you see duplicate collection accounts on your credit report, you need to dispute those accounts quickly to prevent damage to your credit score. File a credit dispute letter with the credit bureau(s) and credit furnishers in question, then consider reaching out to legal professionals if your dispute doesn't solve the problem.